In case anyone thought Monday's irrational exuberance meant the markets really were about to rebound, there are clear signs that the economy is still sinking. The Ted Spread is still at astonishing record levels. And today's news is that retail sales are plunging. Nobel Prize-winning douchebag economist Paul Krugman says:
This reinforces a point I’ve been trying to make: even if the rescue now in train succeeds in unfreezing credit markets, the real economy has immense downward momentum. In addition to financial rescues, we need major stimulus programs.
Government programs. And to underscore that we are, indeed, in the midst of a true paradigm shift, on Monday, the New York Times reported that there is now a bipartisan consensus for new regulation. Government regulation. It starts with the obvious- the financial sector- but that's not at all where it ends.
But the pro-regulation climate will probably spill over into other sectors. That seems especially likely now that the Treasury and the Federal Reserve are pumping money into corporations of all types to shore up their capital and to finance day-to-day operations until credit markets recover, and with the auto industry separately getting billions in government assistance.
That will give impetus to those who seek new emission curbs and energy limits to address climate change; or who want health care mandates to expand insurance coverage and restrain costs; or who are calling for new safeguards for food, prescription drugs and toys from China and other less-regulated trading partners.
The era of tacit acceptance that government is the problem is over. It really began with Katrina. The destruction of a great city managed to awaken people to the fact that government serves critically important functions. The past month was the final proof. The people are ready. The "leaders" are ready to follow. Right wing blowholes have already begun to whine.
In the mid-1980s, amidst media darling Reagan's war on government, I told an Oregon gubernatorial candidate that he should run on the theme that the Republican mantra of "less" government was jingoistic tripe, and that Democrats being about "more" government was a simplistic lie; the real answer was better government. At times, that would mean more; at times that would mean less. But it was about quality, not quantity. That candidate didn't take my advice. And lost that race. Clearly, the relationship was causal...
The mood in this country has turned around. The Democrats almost certainly will be charged with the task of cleaning up Bush's countless messes and disasters. But they are riding a wave that comes maybe once every half-century. They must do this right. Entire generations of Americans were allowed to forget the good that government can do. It's not about "more," it's about "better." Barack Obama and the Democratic Party soon will have the chance to prove it.